State budget chairman: End state-run liquor stores

BILL STARLING | BIRMINGHAM NEWS | ASSOCIATED PRESS | FILE
An ABC Beverages store is pictured in April 2009 in Chickasaw. State Sen. Arthur Orr is looking for ways to save money, and his liquor store legislation stems from that.

By PHILLIP RAWLSAssociated Press

Published: Sunday, January 20, 2013 at 6:01 a.m.

Last Modified: Sunday, January 20, 2013 at 11:43 p.m.

MONTGOMERY — Alabama’s state-run liquor business will celebrate its 76th anniversary Feb. 2. If state Sen. Arthur Orr has his way, that business will be greatly curtailed by the 77th anniversary, with state-run liquor stores being replaced by private retailers.

Orr, R-Decatur, said he will have a bill ready for the legislative session starting Feb. 5 that will get the Alabama Alcoholic Beverage Control Board out of the retail liquor business.

The senator’s legislation follows a similar move in Washington, which resulted in increased sales and higher prices for customers.

Orr said state liquor stores are vestiges from the end of Prohibition and have outlived their usefulness.

“Should the state be in the liquor business in the 21st century? Is that truly a mission of state government?” he asked.

Orr, the powerful chairman of the Senate’s General Fund budget committee, is looking for ways to save money, and his liquor store legislation stems from that. He said that if Alabama kept its same taxes and fees on liquor, but eliminated the 169 retail stores and their 600 employees, it would free up $46 million for use by other state agencies.

Under Orr’s plan, the Alabama Alcoholic Beverage Control Board would continue its wholesale operation that distributes liquor to stores and would keep enforcing liquor laws.

It would also decide how many retail store locations are in each town and set up a competitive bidding process to decide who gets the locations. That process must make sure there is not a liquor store on every corner, Orr said.

The ABC Board’s administrator, former Republican state Rep. Mac Gipson of Prattville, said he was intrigued by the idea of privatization when he was in the Legislature. But after two years in his present job, he’s decided the current system is efficient from a business and enforcement standpoint.

Alabama is one of 18 states where government controls alcohol sales. In some of those states, the government only controls the wholesale distribution. In others, government controls wholesale and retail. But Gipson said Alabama is unusual because in addition to its state-run stores, Alabama licenses 550 private package stores to sell liquor, beer, wine and mixers. They retail about one-fourth of the liquor in Alabama, according to the ABC Board’s annual report.

Those stores buy cases from the ABC Board at a 10 percent discount and usually sell their products about 15 percent higher than state-run liquor stores, Gipson said. They rely on convenience to sell because they are open later than state-run stores or they locate in areas without state-run stores.

Using them as an example, Gipson said going to all private stores will mean higher prices for consumers.

Washington voters approved a move from state-run liquor stores to private stores in 2012. It has not been the boom for mom-and-pop businesses that some people expected.

“It’s been soft,” said Ted Eaton, general manager of Wenatchee-based Good Spirits, which took over four state-run liquor stores.

He said the state added a fee for gross sales of liquor. He said grocery stores and big-box retail stores that sell liquor can spread out that fee over their other products and market liquor for less than small liquor stores. “It’s making us not competitive,” he said.

Orr said his bill won’t allow sales in grocery or discount stores. He envisions stand-alone liquor stores like the private stores already in Alabama. He said his bill doesn’t grandfather in the existing 550 private stores, but will have some accommodation for them in the bid process for the new licenses.

He’s also looking at some concession for laid-off ABC Board employees who want to bid for licenses and for private liquor stores that hire the laid-off workers.

Former state Reps. Taylor Harper of Grand Bay and Noopie Cosby of Selma tried nearly the same thing in 1983 and 1984 without success. Harper said their proposal died under pressure from state employees concerned about job losses and from business people who leased store space to the ABC Board. Harper said Orr probably has a better chance of passing his bill because the mood in the Legislature is different from the 1980s, with many current lawmakers favoring privatization.

“This is one of the things in my political bucket list — to see this occur,” said Harper, 68.

In addition to the opponents from Harper’s days in the Legislature, Orr is getting opposition from religious groups.

Joe Godfrey, executive director of the church-funded Alabama Citizen Action Program, said sales traditionally go up in states where the liquor business is turned over to private enterprise. He said Alabama has always been a low consumption state, and he doesn’t want to see that change.

Washington’s Department of Revenue reported sales went up 2.9 percent in the first four months with private liquor stores.

That was even with prices going up. The average retail price of a liter of liquor, including taxes, was $24.90 in September, compared with $21.58 a year earlier.

Orr said he’s still got lots of tinkering to do with his bill before Feb. 5, including possibly lowering the taxes or fees on liquor. He is going into the sessions with no illusions about his odds.

“It will be very difficult to pass this legislation,” he said.

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